Oil Sits at Center of Next President’s Foreign Policy Challenges

The only general consensus among the speakers, panelists and audience members at the FDD forum was that the world’s sole superpower has a lot of dangerous threats to tackle, whether they come from state or non-state actors.

With international events happening at a quick pace and relationships with allies and enemies in flux, the next president will have a long list of foreign policy challenges, with major oil-producing countries as top concerns. Speakers at this week’s Foundation for Defense of Democracies (FDD) event in Washington, DC debated what direction the next administration should take, with a variety of viewpoints being presented. A number of critics vented their frustration at President Obama’s passive approach in dealing with U.S.’s opponents and lack of bellicose rhetoric, while others supported staying along the current course with some modifications.

The only general consensus among the speakers, panelists and audience members was that the world’s sole superpower has a lot of dangerous threats to tackle, whether they come from state or non-state actors.

“National security threats have evolved and metastasized. More terror groups are carrying out more attacks in more countries,” said FDD president Clifford May.

The number of terrorist attacks are on the rise; European countries are getting struck by the Islamic State and dealing with refugee problems; traditional enemies such as Russia and Iran are muscling for more power in the Middle East; Syria continues to be a bloodbath; and longstanding Gulf ally Saudi Arabia is waging strikes in Yemen as a show of force.

Below is a list of top international challenges for the next administration that was discussed at the FDD forum. Naturally, each one has major links to oil.

ISIS and international terrorism

Terrorist group ISIS has seen setbacks on the battlefield in Syria and Iraq, but its network has still been able to carry out lethal attacks, most notably in Paris, Brussels and Ankara. Radical Islam has been a threat for decades and was thrust fully into the spotlight after the September 11, 2001 al-Qaeda attacks on the World Trade Center and the Pentagon. But while al-Qaeda is an organization with centralized control and its origins and motivations are more political in nature, ISIS, who receives significant financing in oil revenues, is fueled by a fervent religiosity and the desire to establish a pure Muslim caliphate. It is not a continuation of previous forms of terrorism. Strategically, its members on the ground outside of Syria and Iraq make decisions when carrying out attacks, making them more unpredictable and more frequent than al-Qaeda, although perhaps less spectacular.

The challenge for world leaders, and the next president, is that they have to fight an ideology and not just a military opponent.

The challenge for world leaders, and the next president, is that they have to fight an ideology and not just a military opponent. A U.S.-led coalition of 50,000 troops is needed to defeat ISIS, Ray Odierno, former US Army Chief of Staff, told the audience. Military action has undermined the dreams of the caliphate, and fighters are demoralized at this point. Even so, ISIS remains a “mass movement” based on “religious and utopian” thinking, said Graeme Wood, the author of the popular article “What ISIS Wants” for The Atlantic. In order to fully eliminate threats coming from ISIS, it will take efforts to fully eradicate this philosophy. Wood noted how many U.S. officials played down the idea that ISIS has anything to do with a religion, but this resistance is untenable.

Syria

The Syrian fiasco has been going on for five years so far and there’s no end in sight. Nor is there a comprehensive strategy from Washington or any other capital for that matter. The conflict pits authoritarian President Bashar al-Assad against ISIS, neither of whom the U.S. wants to support.

The Syrian conflict has emboldened Russian President Vladimir Putin and allowed Syrian President Bashar Assad to firm his grip on power, despite having to fight ISIS and rebels opposed to the Ba’athists in power. The conundrum for the U.S. and Western allies surrounds not wanting to support Assad but needing to defeat ISIS. The general consensus at the FDD event was to give weapons assistance to the Syrian rebels to help them fight the regime. According to the Wall Street Journal, the Central Intelligence Agency and regional partners have put together procedures—known as Plan B—to supply more-powerful weapons to the rebels.

The biggest worry: What the country would look like if Assad is removed from power. A vacuum could give ISIS or other radical groups possible control. Moreover, the U.S. doesn’t have a good track record with establishing democratic or stable leaders once regimes change—see Iraq, Libya and Afghanistan as recent examples.

Russia

“Russia wants to challenge the international community’s right to intervene against brutal, despotic leaders.”

Although Russia is suffering economic hardships because of sanctions and low oil prices, Putin has stepped up Moscow’s relevance on the international stage. His backing of Assad has helped keep the regime in power and complicates matters in that conflict—any solution involves having to negotiate with Putin, who wants to tighten his grip on power and rewrite global rules in dealing with authoritarian rulers. “Russia wants to challenge the international community’s right to intervene against brutal, despotic leaders,” said Evelyn Farkas, former Deputy Assistant Secretary of Defense for Russia, Ukraine and Eurasia in the Obama administration.

There’s also the issue of Ukraine and Crimea. While sanctions have undermined the country’s economy, Moscow is still heavily involved in Eastern Ukraine and has not given back Crimea, which it annexed in 2014.

Obama wanted a “reset” with Russia, something all administrations have done for decades while dealing with the Russia and the former Soviet Union, and the next president will also likely put forth a reset, too. Is more strength against Putin needed? Farkas said the U.S. should provide defensive equipment to Ukraine, Moldova and Georgia. Moreover, besides helping them defend their territory, the U.S. should work to shore up their economies and be active diplomatically in the region.

Putin’s main goals are tightening power at home and being a more important global actor, two developments that muddle U.S. foreign policy regarding Europe, the Middle East, China, and oil markets.

Iraq and the KRG

Currently, the Kurdistan Regional Government (KRG) is in dire straits. It is running massive deficits every month; it can’t pay its soldiers and has a bloated civil service; it is fighting ISIS while also dealing with tensions with Baghdad; it has to manage almost 2 million displaced persons; oil investment has ground to a halt; and nationalism is on the rise.

“What have we benefited from this country called Iraq?” said KRG’s Deputy Prime Minister Qubad Talabani.

Because of unprecedented economic fiscal problems, which have resulted from low oil prices, its revenue spat with Baghdad, and the war against ISIS, the KRG is seeking direct budget support and has “no problem” with conditions on any assistance, said Talabani.

Because of unprecedented economic fiscal problems, which have resulted from low oil prices, its revenue spat with Baghdad, and the war against ISIS, the KRG is seeking direct budget support.

The next administration has a number of issues when it comes to the KRG, not least of all the rise of Kurdish nationalism and the possibility of an independent Kurdistan. What will it do in the case of Kurdish independence, which may be up for a referendum vote this year? Such support would anger Baghdad and Ankara. Secondly, ISIS now controls Mosul, the second largest city in Iraq, and coalition forces have been hesitant to retake the city. If it is liberated, the U.S. would be involved in finding a political solution for its governance, given that it borders the semi-autonomous region of the KRG and it is ethnically and religiously diverse. Furthermore, while the U.S. is giving military assistance to the Peshmerga, it hasn’t been as involved in humanitarian aid.

Iran

Iran is a contentious issue when it comes to U.S. foreign policy. Many of Obama’s supporters see the agreement over Iran’s nuclear ambitions as one of his greatest foreign policy achievements. But his detractors see it as capitulation to a longstanding enemy. At the FDD event, the Obama administration’s deal with the Islamic Republic came under heavy criticism from a number of speakers, including Senator Susan Collins of Maine.

Currently on the 2016 presidential campaign trail, Republican hopefuls Ted Cruz and Donald Trump said they would tear up the deal. While there was no love for the agreement at the event, a number of speakers advocated building off the deal to strengthen it and give the U.S. more leverage.

While there was no love for the agreement at the FDD event, a number of speakers advocated building off the deal to strengthen it and give the U.S. more leverage.

“It’s unrealistic to shred the Iran agreement at this point. That would play into Khamenei’s hands,” said Mark Dubowitz of FDD. “We should take the Khamenei approach and continue to negotiate the Iran deal.”

Dubowitz is concerned about “sunset revisions,” stating that the next president should prioritize dealing with “fatal flaws” of the agreement so that Iran doesn’t build a nuclear weapon years from now. He believes that the administration had made a “big bet” on Hassan Rouhani, the current president of Iran, who is seen as a moderate by many in the West, and the belief in an emerging pragmatic Iran.

Iran is still considered a state sponsor of terrorism by the Department of State and is seeking regional hegemony. Many critics do not believe Iran has fully given up its nuclear ambitions despite the agreement last year.

Elliot Abrams, who served in the George W. Bush administration and is now with the Council on Foreign Relations, said he has been particularly worried about Obama being too careful in his rhetoric when dealing with states like Iran and that the next president needs “tougher talk” and to explain and condemn rogue states with “moral clarity.”

Many of Obama’s supporters, however, find his rhetoric on the international stage a reflection of his calm and calculated demeanor. In an essay in The Atlantic, author Jeffrey Goldberg noted how Obama’s careful talk is one of the president’s trademarks. “He also thinks rhetoric should be weaponized sparingly, if at all, in today’s more ambiguous and complicated international arena.”

“[Obama] thinks rhetoric should be weaponized sparingly, if at all, in today’s more ambiguous and complicated international arena.”

The biggest damage in this area was “the red line” comment in regards to Syria. Obama said he would take action against Assad if he used chemical weapons against civilians, but the president failed to intervene after innocent Syrians were murdered with sarin gas.

One thing a number of panelists agreed on was that the next president, whether it is Democratic candidate Hillary Clinton or either Trump or Cruz from the Republican side, will take a tougher line on Iran, even if it is simply stepping up the rhetoric.

Turkey

Turkey is in a “downward spiral,” a development that has large implications for the U.S., its European allies, and the Middle East. The country is pivotal given that it is a NATO member and sits geographically between Europe and the Middle East. In recent years, Turkey has been on the front lines of dealing with the migrant crisis from the Middle East and North Africa, and it is also a main opponent of Bashar Assad.

Speakers expressed worry over the country’s move toward authoritarianism, with witch hunts for academics, journalists being jailed, and a number of crackdowns on media outlets. Aykan Erdemir, a former member of the Turkish Parliament and a Senior Fellow at FDD, said that Turkey is “gradually moving away from Western values and secular liberal democracy.”

There is general agreement that President Erdogan’s power grab is troublesome, but it’s unclear what the path the next president should take with Turkey, whose top priorities are dealing with the Kurds and their party the PKK.

U.S. foreign policy at a crossroads

Foreign policy hasn’t been the main issue on the campaign trail so far this year, and much of what has been discussed has lacked specific details and credibility. The Obama Doctrine of passivity and soft rhetoric may be fully discarded, or at least significantly modified with the next administration. Whatever the case, as the FDD event showed, there will be plenty of known challenges—along with any unknown unknowns that come about—the new president will have tackle once he or she takes office.

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The Fuse is an energy news and analysis site supported by Securing America’s Future Energy. The views expressed here are those of individual contributors and do not necessarily represent the views of the organization.

Issues in Focus

Safety Standards for Crude-By-Rail Shipments

A series of accidents in North America in recent years have raised concerns regarding rail shipments of crude oil. Fatal accidents in Lynchburg, Virginia, Lac-Megantic, Quebec, Fayette County, West Virginia, and (most recently) Culbertson, Montana have prompted public outcry and regulatory scrutiny.

2014 saw an all-time record of 144 oil train incidents in the U.S.—up from just one in 2009—causing a total of more than $7 million in damage.

The spate of crude-by-rail accidents has emerged from the confluence of three factors. First is the massive increase in oil movements by rail, which has increased more than three-fold since 2010. Second is the inadequate safety features of DOT-111 cars, particularly those constructed prior to 2011, which account for roughly 70 percent of tank cars on U.S. railroads. Third is the high volatility of oil produced from the Bakken and other shale formations, which makes this crude more prone towards combustion.

Of these three, rail car safety standards is the factor over which regulators can exert the most control. After months of regulatory review, on May 1, 2015, the White House and the Department of Transportation unveiled the new safety standards. The announcement also coincided with new tank car standards in Canada—a critical move, since many crude by rail shipments cross the U.S.-Canadian border. In the words DOT, the new rule:

Since the rule was announced, Republicans in Congress sought to roll back the provision calling for an advanced breaking system, following concerns from the rail industry that such an upgrade would be unnecessary and could cost billions of dollars. The advanced braking systems are required to be in place by 2021.

Democrats in Congress have argued that the new rules are insufficient to mitigate the danger. Senator Maria Cantwell (D-WA) and Senator Tammy Baldwin (D-WI) both issued statements arguing that the rules were insufficient and the timelines for safety improvements were too long.

The current industry standard car, the CPC-1232, came into usage in October 2011. These cars have half inch thick shells (marginally thicker than the DOT-111 7/16 inch shells) and advanced valves that are more resilient in the event of an accident. However, these newer cars were involved in the derailments and explosions in Virginia and West Virginia within the past year, raising questions about the validity of replacing only the DOT-111s manufactured before 2011.

Before the rule was finalized, early reports indicated that the rule submitted to the White House by the Department of Transportation has proposed a two-stage phase-out of the current fleet of railcars, focusing first on the pre-2011 cars, then the current standard CPC-1232 cars. In the final rule, DOT mandated a more aggressive timeline for retrofitting the CPC-1232 cars, imposing a deadline of April 1, 2020 for non-jacketed cars.

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DataSpotlight

The recent oil production boom in the United States, while astounding, has created a misleading narrative that the United States is no longer dependent on oil imports. Reports of surging domestic production, calls for relaxation of the crude oil export ban, labels of “Saudi America,” and the recent collapse in oil prices have created a perception that the United States has more oil than it knows what to do with.

This view is misguided. While some forecasts project that the United States could become a self-sufficient oil producer within the next decade, this remains a distant prospect. According to the April 2015 Short Term Energy Outlook, total U.S. crude oil production averaged an estimated 9.3 million barrels per day in March, while total oil demand in the country is over 19 million barrels per day.

This graphic helps illustrate the regional variations in crude oil supply and demand. North America, Europe, and Asia all run significant production deficits, with the Middle East, Africa, Latin America, and Former Soviet Union are global engines of crude oil supply.